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June 29, 2006

US agency plans to move into new New York Freedom Tower

by Sam Savage

By Joan Gralla

NEW YORK (Reuters) - New York's Freedom Tower got a
financial boost when the U.S. Customs and Border Protection
agency signed a letter of intent to lease 600,000 square feet
of offices, Gov. George Pataki said on Thursday.

The 1,776-foot (541-meter) Freedom Tower building is meant
to symbolize New York's defiance in the teeth of the September
11, 2001 air attacks, but real estate experts say fears of yet
another deadly assault make luring tenants an uphill battle.

The U.S. customs agency had leased about the same amount of
space in the first World Trade Center before it was destroyed.

The Republican governor, whose standing has been hurt by
the delays and feuds over the rebuilding, also told reporters
he was confident of meeting the Port Authority of New York and
New Jersey's September deadline for leasing one million square
feet of space in the Freedom Tower.

The agency, which owns the site, will take over the
building from developer Larry Silverstein if this benchmark is
met because it wants to ensure there is enough cashflow.

Pataki, now weighing a presidential bid, explained state
agencies can rent 400,000 square feet to one million square
feet of space in the Freedom Tower as their leases expire over
the next few years.

The Freedom Tower, whose cost is estimated at more than $2
billion, will have a total of 2.6 million of office space.

"I can confidently say we'll have no difficulty reaching
leaseholds for one million square feet, which is the Port
Authority's threshold for taking over the Freedom Tower," the
governor said.

Even the Port Authority has admitted its employees, some of
whom survived both the 1993 and 2001 attacks, do not want to
return to the site.

The original World Trade Center was also very difficult to
rent when it was built in the 1970s though in that case the
problem stemmed from an oversupply of office space. It was only
in the late 1990s that tenants found the complex desirable,
partly due to its successful underground shopping mall.

The customs agency's lease is being negotiated by the
federal General Services Administration, and Port Authority
Chairman Anthony Coscia said the goal was to rent the Freedom
Tower at prices ranging from around $40 to $50 a square foot.